Wednesday, April 30, 2008

On April 27, we wrote this piece about a new study conducted by the University of Western Ontario in the city of London, Ontario, Canada in which the researchers found what are referred to as "food deserts," urban neighborhoods where residents are underserved by grocery stores that offer a decent selection of basic grocery products and fresh foods at reasonable prices.

We discussed the fact that although one can't generalize such a study to every city in North America, the study's methodology can be used anywhere to analyze the "food desert" phenomenon.

We also discussed the fact their are documented urban (and some rural) food deserts in numerous U.S. city's such as Detroit, New York City, Phiadelphia, Los Angeles, Cleveland, Oakland, San Francisco and many others.

Add Seattle, Washington to that U.S. "food desert" list.

Today's Seattle Post-Intellegencer newspaper has an article about that city's urban "food deserts."

She reports on research conducted by the University of Washington in which the researchers documented this over 30-minute bus ride to a grocery store phenomenon. The study even found that even in some wealthy Seattle neighborhoods it was difficult to find a grocery store within a decent walking distance.

The story also discusses some of the urban initiatives we've mentioned on Fresh & Easy Buzz before, such as New York City's Green Cart initiative in which the city recently passed legislation to allow 1,000 sidewalk fresh produce carts as a way to give inner-city residents better access to fresh fruits and vegetables.

Additionally, it mentions the state of Pennsylvania's $30 million dollar seed capital investment which is designed to lure grocery stores that offer basic grocery products and fresh and healthy foods at reasonable prices to these "food desert" neighborhoods.

Many of these urban initiatives are going under the collective name of the "healthy corner store" movement, as we mentioned here before.

Fresh & Easy and 'food deserts'

As we written about before, one of Tesco's strategies with its Fresh & Easy Neighborhood Market USA small-format, combination basic grocery and fresh foods stores is to locate stores in these underserved urban neighborhoods.

Thus far the grocer has opened two stores in such neighborhoods in Southern California, in Los Angeles and in Compton, and plans to open stores in neighborhoods underserved by grocery stores that offer fresh and healthy foods in San Francisco, Oakland and Sacramento in Northern California next year.

The residents of urban Seattle may have one alternative to long walks and bus rides in terms of being able to do their grocery shopping in the distant future.

We've known for some time that opening Fresh & Easy grocery stores in Oregon and Washington State are a part of Tesco's longer-term strategic plan for its Fresh & Easy USA venture.

The plan essentially rolls out this way--or at least it did as late as last November: Start in Southern California, the Phoenix, Arizona Metropolitan region and the Las Vegas, Nevada metro area with the Fresh & Easy stores; then move to Central (Bakersfield region/Central Valley) and Northern California (San Francisco Bay Area and Sacramento region), then once in Northern California, shoot up into Oregon and Washington state.

We believe that plan is still on the books, but that the timeline has likely been pushed back. Originally, according to our sources, the first Oregon and Washington state stores would likely open as early as late 2009, not too long after the Northern California stores would have opened.

We now believe that timeline has been pushed back, and that going into the Pacific Northwest is far less of a current focus for Tesco as it wants to get more stores grocery markets in California, Arizona and Nevada, and increase business substantially in those grocery stores already open and operating.

But, the Pacific Northwest expansion is still a part of Tescos' Fresh & Easy USA strategy.

Tesco's 'food desert' strategy has merit

As we've argued before in Fresh & Easy Buzz, we believe Tesco's strategy of locating some of its small-format grocery stores in urban, inner city areas that are underserved by grocery stores which offer a decent selection of basic groceries and fresh foods at reasonable prices, is largely a good one. In fact, we've suggested the grocer build more than the handful of stores it's built thus far in these urban "food desert" neighborhoods, which abound.

There are few if any other supermarket retailers locating stores in these underserved neighborhoods in the United States. As the Seattle Post-Intelligencer article shows, even cities considered to be fairly upscale like Seattle have urban food deserts.

Los Angeles, Phoenix, San Francisco, Oakland, Fresno, Sacramento, these and many other cities in the regions' where Tesco currently operates with its Fresh & Easy grocery chain have neighborhoods that are underserved by grocery stores offering basic groceries and fresh foods at decent prices.

Further, cities ranging from Philadelphia and Los Angeles, to San Francisco and now Seattle, are offering grocers economic incentives to locate stores in these urban "food desert" neighborhoods.

Right now, Tesco is about the only grocery chain in the Western U.S. answering the 911 urban "food desert" phone call as part of its retail strategy. That could very well turn out to be a important business response on Tesco's part.

Today's issue of the Yuma Sun, a daily newspaper in Arizona, reports on the first 100% Arizona-produced wine, which has been created by a pair of winemaker partners who are trying to gain distribution in the state's supermarkets and wine and spirits stores.

The 100% Arizona-made wine, a white wine blend named Tazi, which is a combination of Chardonnay, Sauvignon Blanc, Riesling and Malvasia Bianca, is being marketed by Eric Glomski and Maynard James Kennan, the winemaker partners in Arizona's Stronghold Vineyard, which is located near Wilcox, Ariizona in Chochise County.

There are about 24 wineries in Arizona, but Stronghold Vineyard is the first and currently only winery to create 100% made-in-Arizona wine with its Tazi white wine blend.

Tazi, which the partners just started pitching to retailers a couple weeks ago, is currently being sold in three supermarkets and two wine stores owned by Arizona-based supermarket chain Bashas, two Whole Foods Market natural foods supermarkets and a number of independent wine shops.

More Bashas'-owned stores (both the Basha's banner and its upscale A.J's Fine Foods banner) are looking to carry the local wine as well. The two wine superstores currently seling Tazi are part of the Sportsman's Wine and Spirits chain, which is owned by Basha's.

Partners Glomski and Keenan are introducing the local, 100% Arizona-produced wine in retail stores personally, conducting bottle-signings and other in-store special events.

The Fresh & Easy angle

We called Stronghold Vineyards to find out if Tesco's Fresh & Easy grocery stores in Arizona were carrying the locally-produced Tazi wine. A spokesperson told us the grocer was not currently selling the local wine brand.

It would be a smart and savvy move for Fresh & Easy Neighborhood market to call Arizona winemakers and marketers Glomski and Kennan and order five or six cases of Tazi, 100% Arizona-produced wine for each of the 17 Fresh & Easy grocery stores currently open in Arizona, along with booking the partners for bottle-signing promotional events in the stores.

Why?

First, as we reported on April 25, a major element of the marketing-oriented public relations campaign Fresh & Easy Neighborhood Market is currently developing with its new PR firm invloves a major campaign designed to position and publicize the grocer's Fresh & Easy store brand fresh foods and grocery products, along with the stores' proprietary and overall wine selection. The grocer's goal: make the foods and wines known and famous.

Second, as we've suggested and argued on Fresh & Easy Buzz for some months, Tesco's Fresh & Easy stores need to do a far better job of localizing the stores' product mixes to the regions, communities and neighborhoods where the stores are located. American consumers love local products--and Fresh & Easy isn't marketing and merchandising to that important aspect of U.S. shopper behavior.

Selling the local wine (Tazi) a win-win

By stocking and promoting the 100% Arizona-made Tazi wine in its Arizona stores, Fresh & Easy would be achieving two things: raising its wine retailing profile in Arizona by becoming the state's current number one retailer of the local wine brand, and enhancing it's store's local product mix.

The reason it would be Arizona's number one retailer of the local wine brand, is because currently only five Bashas'-owned stores, two Whole Foods Market natural foods supermarkets and a number of single-store independent wine shops are selling the wine, which the partners' just started to distribute a couple weeks ago.

Since Fresh & Easy has about 17 stores operating in Arizona, if it sells the Arizona-produced wine in all those stores, it would immediatly become the de facto number one retailer of the locally-produced Tazi white wine in the state.

While adding one item, the local wine brand, to the store does not a local marketing mix make, it's a key move because Tazi is the first 100% Arizona-made wine. First in such cases are good things.

As a result, Fresh & Easy can generate lots of media attention by selling and promoting the local wine in all its Arizona stores, especially by having the winemaking partners do bottle- signing events in each store.

As a result, some good positioning for Fresh & Easy's wine offerings in its Arizona stores will occur from all the publicity generated by merchandising the wine (and touting it well) and having the winemakers in-store conducting the bottle signing events. This of course goes to the strategic marketing-oriented PR campaign goal we described above. It also generates much needed general awareness for the stores.

More win-win in the neighborhood

Here are a few win-win results of bringing in and promoting the local Tazi wine in-store and through the media:

>Enhances credibility as a supporter of local agriculture>Creates excitement in the stores around a local theme>Generates lots of press with a positive angle, ie: localization>Supports local entreprenuers, which helps put the "neighborhood" in Neighborhood Market>Helps towards goal of positioning store wine selections>Demonstrates desire to support local businesses>Earns increased local consumer goodwill

We didn't list it above, but since we hear the local Tazi wine is selling very well in the stores its currently in--especially during the in-store bottle signing events with the partners--Fresh & Easy also is likely to obtain the added benefit of increased wine sales from bringing in the 100% Arizona-made wine.

People love products produced in the place where they live; that's one reason local foods' buying is such as fast-growing trend in the U.S. and elsewhere. It feeds into one's sense-of-place emotionally, as well as having practical economic implications: the more local products you buy the more you support your local economy.

Were we in-charge of marketing and merchandising for Tesco's Fresh & Easy, we would call the makers of Tazi white wine tomorrow and have them reserve 5 or 6 cases of their locally-produced wine per-Fresh & Easy store for delivery as soon as possible. We also would condition that sale on having them agree to do one in-store bottle-signing event per-store as a way to introduce the new 100% Arizona-produced wine in the stores.

Of course, each of those in-store events would be publicized to the local print and broadcast media, as well as touted in the grocer's retail advertising circular in advance. Local food and wine writers would be invited to the in-store events, as would other selects members of the local media.

The great thing about bringing the local wine into the stores and promoting it in-store and via the media, is that its a good thing for all of the stakeholders involved...a win-win. Doing so helps Fresh & Easy, the fledgling winemaker partners who's long-term goal it is to build an Arizona wine industry, and the state's agricultural industry.

It also generates lots of local consumer goodwill--and probably many new, first time shoppers to the Arizona Fresh & Easy stores. Such win-wins aren't usually so easy--and logical--to find.

Tuesday, April 29, 2008

As we reported in Fresh & Easy Buzz on March 7, Sacramento native and former NBA basketball star, turned Sacramento developer, turned current candidate for Mayor, Kevin Johnson, is the driving-force behind bringing a Fresh & Easy Neighborhood Market grocery store to the capital city's low-income Oak Park neighborhood, where Johnson was raised.

On March 6, the 42 year old Johnson, who also runs a non-profit community development organization in Sacramento, tossed his hat into the ring as a candidate for mayor, running against incumbent Heather Fargo and a couple other candidates for election this November.

One of those other candidates for mayor of Sacramento is Murial Strand, an engineer by profession, as well as being an environmental sustainability advocate.

Mayoral candidate Strand also is a blogger. Here is what she says in her blog, Murial for Mayor," about why she is running for mayor of Sacramento:

"Why am I running? Because I want Sacramento's sustainable future at the top of the public agenda. After peak oil and climate change, I want a livable future city. Am I qualified? Yes. I have been reading, studying, and thinking about sustainability for 3 decades. Why should you hire me for mayor? So I can facilitate our creation of our sustainable future amid an uncertain and unsustainable present. If you like the ideas discussed below (in her blog), please share them with friends and family."

In her "Murial For Mayor" blog today, candidate Murial Strand has a post titled "Taxes & Investments," in which she asks the question and discusses whether or not the Fresh & Easy grocery store set to be built and opened next year in Sacramento's Oak Park Neighborhood is good for the neighborhood. [Remember, candidate for Mayor Kevin Johnson owns and is the developer of the piece of property where the Fresh & Easy market will be built.]

Candidate Strand says she checked Tesco's Fresh & Easy out online. She says the grocer looks like its aiming at the "Trader Joe's niche," which is a partly correct assessment that we give her an A for since she's an engineer and political candidate rather than a food and grocery industry analyst.

As a note: we've called Fresh & Easy's small-format, basic grocery store and fresh foods convenience-oriented format sort of a mini-Costco meets Trader Joe's before, so not a bad analysis for candidate Strand.

She also comments on Fresh & Easy's policy of giving $1,000 to a local community group for each new store they open. However, she says "they (Fresh & Easy) didn't say exactly who gets the money." What they do is have the store employees vote on which local, non-profit community group to give the thousand bucks to candidate Strand--and readers.

It's not all that much of a donation for a company as large as Tesco, the world's third-largest retailer with over $60 billion in annual sales, but it isn't bad.

Candidate for Sacramento Mayor and blogger Strand then delves a bit deeper into whether or not she thinks a Fresh & Easy grocery store will be good for the city's Oak Park low-income neighborhood.

She says in her research on the grocer, she "saw way too many packaged products with their recipe suggestions."

She offers her advice to the voters of Sacramento: "The affordable way to eat healthy food is to buy basic ingredients and make it yourself...If I lived in Oak Park and wanted to buy healthy food, I would go to the Co-op (that's the Sacramento food cooperative grocery store) and to the farmers' markets, and occasionally to Trader Joe's."

The mayoral candidate adds: "I like to play the field (shopping-wise). But transportation can be a problem for moms and bus riders. When the city (of Sacramento) was looking high and low to find a grocery store at Stockton & Broadway, I suggested the neighborhood consider organizing a consumers' cooperative store. And there is nothing stopping them from doing this now, investing their rebates in themselves."

As we reported on March 7, a coalition of residents living in Sacramento's Oak Park neighborhood had been trying for some time to get a grocery chain or local independent to build and open a store in the lower-income neighborhood.

Based on our conversations with members of these neighborhood groups, they are pretty happy with Candidate Johnson and Tesco for bringing the Fresh & Easy grocery market to the neighborhood--especially since none of the local chain or independent grocer's they contacted would consider doing so.

The Oak Park neighborhood is underserved by grocery stores that offer reasonably-priced groceries and fresh foods. Such regions are termed "food deserts," and locating in such neighborhoods is a strategy Tesco has said is key to its Fresh & Easy USA venture in California, Arizona and Nevada.

We've visited the Oak Park neighborhood and it is an up and coming area, despite having a bit of a rough history. Lots of new retail has opened--except for supermarkets--and numerous cafes and restaurants are sprouting up throughout the neighborhood.

There's also numerous young professionals moving into the neighborhood, renovating old houses and injecting excitement into the area. A growing arts scene also is developing.

From a business standpoint, we think Oak Park should be a good location for Fresh & Easy. The neighborhood has lots of foot traffic, many residents don't own cars, and there aren't any grocery stores close to the Fresh & Easy sight that sell reasonably-priced basic grocery items and fresh foods.

Fresh & Easy would be wise though to localize the Oak Park store as much as possible to the neighborhood. This is a theme--adding local design elements on top of the basic Fresh & Easy format blueprint and better localizing the store product mix--that we discuss often on Fresh & Easy Buzz. It's an element that's missing in Tesco's Fresh & Easy stores which our analysis tells us is hampering sales at the 61 small-format grocery markets currently open in the Western USA.

A "Fresh & Easy Oak Park Mini Cafe" inside the store would be a smart addition for Fresh & Easy to make in the Sacramento neighborhood store as a way of creating a "sense of place" in-store, as well as creating a neighborhood destination spot, which would result in shoppers lingering longer in the grocery store and purchasing more.

Doing these localization elements will endear the residents of Oak Park--and maybe even candidate for mayor Murial Strand--to Fresh & Easy and the store. It also will greatly enhance sales, as Sacramento consumers are used to and like to patronize locally-oriented food and grocery retailers, even if they are from far away but respect and tailor their stores to the community.

Meanwhile, we have a feeling the Oak Park neighborhood will vote overwhelmingly for Kevin Johnson, regardless of what candidate Strand posts in her blog. He's the guy from the neighborhood made good: NBA all-star, local developer, community activist.

He's also the guy from the neighborhood who came back to it, has bought lots of property in it, and is attempting to develop more retail and other service-oriented business on it for the neighborhood, which includes the Fresh & Easy grocery store.

His non-profit community development organization also is located in the neighborhood and does much charitable work with minority and low-income young people. You can bet candidate Johnson is conducting a "full court press" for votes in Oak park.

This is no knock on candidate Strand; she seems to have much going for her. It's just a dispassionate analysis of one neighborhood in Sacramento; Oak Park.

That neighborhood--Oak Park--has a future Fresh & Easy grocery store, an NBA all-star basketball player...and now a mayoral battle in common. Who says the retail grocery business is narrow and dull? Not us.

Nor is the three month new store opening pause began earlier this month merely a pre-planned event designed for the shear purpose of giving the Fresh & Easy USA team a bit of breathing room after six months of new store-opening frenzy, before they crank-up the new store opening blitz again beginning in July. It's part of the reason but hardly the only one.

Rather, the UK-U.S. across the pond hotline between Tesco PLC CEO Sir Terry Leahy and Fresh & Easy USA CEO Tim Mason is getting lots of regular use these days.

The corporate jet also is generally fueled and ready so as to be able to bring a steady stream of Tesco execs to Fresh & Easy's Southern California U.S. outpost at moments notice in order to discuss what can be done to jump-start the small-format, convenience-oriented Fresh & Easy grocery chain between now and September, 2008, when Sir Terry has promised Tesco PLC will break out Fresh & Easy's sales and profit numbers like the retailer does for its other international retail divisions.

Tesco is far from desperate regarding its Fresh & Easy USA grocery retailing venture in the Western USA as some analysts are suggesting. However, things are far from rosy, and the corporate mood isn't "just fine and dandy" like viewers of the video webcast interview in which CEO Leahy told a public relations interviewer how pleased he and the corporation are with Fresh & Easy's performance to date, might have gathered from viewing the four minute Q&A-style piece a couple weeks ago.

Fresh but not so easy

We can report discussions at Tesco PLC corporate headquarters in the UK are ranging from new marketing initiatives and possibly making format changes to the Fresh & Easy grocery stores, to whether or not there should be some major changes in the senior management team in Southern California.

We've also been told that a topic Fresh & Easy Buzz has been focusing on for months is being regularly discussed both in the UK and at Fresh & Easy's corporate HQ in Southern California. That topic is the "localization" and customization, or lack thereof, of the Fresh & Easy grocery stores to the respective regions, cities and neighborhoods where the stores are located.

To use an analogy, the Fresh & Easy grocery stores are like a residential housing contractor that builds shotgun-style tract homes. Each house is identical regardless if it is in Los Angeles, Phoenix, Arizona or Las Vegas, Nevada. Tract homes have their merits but most Americans long for the day when they can purchase a customized one.

On the other hand, one of the keys to Whole Foods Market, Inc's success in the U.S. is that its more like a builder of custom homes.

Whole Foods' uses a basic blueprint for its supermarkets, but its stores in Austin, Texas, New York City, Phoenix, Arizona and Southern and Northern California for example are all customized on top of that basic blueprint to reflect the unique historical, cultural and demographic aspects and realities of each of those respective regions, communities and neighborhoods its stores are located in.

U.S consumers love this personalization, "localization" and customization in their food stores--just like they do in their houses.

Tract houses are starter homes for Americans. Custom homes are where they want to spend their lives.

And, notice how once most American's buy a tract home, they then customize it as much as possible so that it reflects who they are vis-a-vis their neighbors. "Localization" and customization are in the DNA of American consumers--and shoppers. Just ask Wal-Mart, which more and more is localizing and customizing its stores in the U.S.

There's nothing for example in the design elements and product mixes of the Los Angeles and Orange County grocery markets to reflect the unique historic, cultural and demographic differences between those two regions in Southern California. The same is the case with the Phoenix and Las Vegas Metro region stores: they look just like the California Fresh & Easy grocery markets despite the regional differences between the areas.

On the other hand, Whole Foods' stores welcome the local consumer with design elements and local food and grocery product mixes that say..."This is your grocery store," even though we are a national chain.

We aren't saying Fresh & Easy and Whole Foods are equivalent in terms of being competitors. They aren't in that they have different target markets and niches. However, the tract house vs. custom home analogy applies we believe because "localism" is a basic premise of American grocery retailing (and inherent in American consumers) regardless if a retailer is a Whole Foods Market or a Fresh & Easy.

Fresh & Easy recognizes 'localization' but doesn't get it

We can report that in its recent interviews with public relations firms, members of Fresh & Easy's senior management team brought up the issue of localizing or customizing the stores and their product mixes, saying the retailer will eventually be able to customize the product assortment on a store-by-store basis.

It's a positive development in our analysis that Fresh & Easy recognizes the need for this localization and customization, but we don't think the grocer realizes just how important it is. It's a central tenant in U.S. food and grocery retailing--and especially so for a start-up retailer in a region like the Western USA where localization just happens to be one of the top consumer hot buttons in 2008.

We also can report there's been much talk in Tescoland about bringing in executives to the Fresh & Easy operation who have extensive experience in U.S. grocery retailing.

While it's true the retailer recently brought in Jeff Adams--who was born in the U.S., worked for Wal-Mart, Inc. for a bit, and was most-recently Tesco's CEO for it's successful Tesco-Lotus retail division in Thailand--Mr. Adams doesn't have any recent experience in the U.S. grocery retailing industry, especially in the Western USA. Further, we haven't found many U.S. food retailing veterans who can tell us much of what he did while working for Wal-Mart. Perhaps that's because it was some time ago?

Trouble in the neighborhood? Who you going to call?

Were we running Tesco PLC, or responsible for the retailer's Fresh & Easy Neighborhood Market USA operations, one of the first things we would be doing (actually we would have done it some time ago) would be to get on the telephone and introduce ourselves to Gene Hoffman.

Mr. Hoffman is a grey-haired (on the sides at least) veteran of the U.S. food and grocery retailing and wholesaling industry. He's also a unique blend of practical grocery retailer and philosopher-poet. In other words, Mr. Hoffman understands the nuts and bolts of food and grocery retailing in the U.S. but also is a thinker who applies insight from fields as diverse as philosophy and even poetry to the field. Leadership and creativity studies are his friends.

Gene Hoffman currently runs his own consulting firm, Creative Strategies, Inc., as well as LeaderShape, Inc., which is a nonprofit organization he started to develop leadership abilities in young adults aged 17 to 28. Mr. Hoffman also comments often on the website retailwire.

In his current work at Creative Strategies, Inc., Mr. Hoffman applies his decades long leadership in the retail food and grocery industry with his studies of retail trends, creativity and leadership, for clients ranging from supermarket retail chains and grocery products' manufacturing companies to banks and other Fortune 500 corporations.

From 1978 to 1987, Mr. Hoffman was chairman and president of SuperValu, Inc. It was under his leadership that, among other innovations, SuperValu launched it highly-successful small-format Sav-A-Lot discount grocery store chain. During his tenure at SuperValu, the supermarket chain and wholesaler's sales more than tripled and net profits quadrupled, compounding at a rate of 21%.

Before taking the helm at SuperValu, Inc., Gene Hoffman was president of Kroger Co., where he spend 21 years in various positions, working his way up to the top leadership spot at what is today the largest grocery retailing chain in the U.S.

It was under Mr. Hoffman's leadership that Kroger went from being a so-so supermarket company to the leading supermarket chain in America. [Read more about what Hoffman did at Kroger here.]

One of Gene Hoffman's major strengths is his understanding of the gestalt of America's food and grocery industry--from the farm to the grocery shelf--as well as having keen insights into the U.S. consumer. He's also a lifelong learner--it's not just his vast experience that guides him but his reading and dabbling in a wide variety of fields that opens him to innovation and change.

In our analysis, Tesco needs to call a guy like Gene Hoffman. In many ways, Mr. Hoffman is to the U.S. food and grocery industry what Warren Buffett, "The Oracle of Omaha," is to investing. Perhaps a good nickname for Hoffman would be the "The Sage of the Supermarket."

Were we running Tesco, before we made any major wholesale changes at the top--CEO, Directors, ect.--we would get on the phone, gas up the corporate jet, and fly Gene Hoffman to the UK for a meeting. At that meeting we would engage the "Sage of the (U.S.) Supermarket" in a consulting relationship for Fresh & Easy USA--and utilize him completely--including making sure he has a direct line of communication to CEO Sir Terry Leahy.

Mr. Hoffman knows multiple formats. Small-format Sav-A-Lot was created under his leadership, and its not all that different than the Fresh & Easy Neighborhood Market format. He also was instrumental in creating the Super Kmart format, which is similar to Wal-Mart's Supercenter format in combining a supermarket within a huge general merchandise store.

And, those two formats are just for starters in terms of his understanding of the U.S. food and grocery retailing landscape.

Cultural Anthropologists will tell you the best way to understand a culture is to immerse yourself in it. It's called participant observation: One lives with, eats with and adopts the local practices as a way to learn everything he or she can about that respective culture.

As our friends in the UK retail food and grocery industry are fond of reminding us, the UK supermarket industry is a village (their term). We agree. Tesco PLC knows this all to well.

And, we remind them right back, that despite the fact the U.S. is much larger than the UK geographically and population-wise, when it comes to the food and grocery industry, it too is a village. Additionally, no place in the U.S. is that village concept more true than in the Western USA, especially in California.

While we aren't suggesting Gene Hoffman, despite being "The Sage of the Supermarket" in the U.S., is a cure-all for Tesco's Fresh & Easy difficulties, he is the first person we would call right now if we were running a grocery chain and were having "trouble in the neighborhood.

Editor's Note: Fresh & Easy Buzz has no business, economic or personal affiliations with Gene Hoffman or Tesco and it's Fresh & Easy Neighborhood Market USA venture. Regarding Mr. Hoffman, he's just the guy we would call if we were having trouble in the neighborhood (market) similar to Fresh & Easy's.

Sunday, April 27, 2008

A new study conducted by researchers at the University of Western Ontario in London, Ontario, Canada and published in the April 18, 2008 edition of the International Journal of Health Geographics, suggests the growing move in recent decades by food retailers to open stores in the suburbs in North America and the United Kingdom has contributed to the emergence of urban "food deserts," or disadvantaged areas of cities with relatively poor access to healthy and affordable food.

The paper explores the evolution of food deserts in London, Ontario, Canada, a midsized Canadian city, by using a geographic information system (GIS) to map the precise locations of the city's supermarkets in 1961 and in 2005. The researchers then use multiple techniques of network analysis to access the changing levels of urban supermarket access in relation to neighborhood location, socioeconomic variables, and access to public transit.

The study's findings suggest residents of inner-city neighborhoods of low socioeconomic status have the poorest access to supermarkets.

Further, the study says spatial inequalities in access to supermarkets has increased over time, particularly in the inner-city neighborhoods of Central and East London, Ontario, Canada, where distinct urban food deserts now exist.

The researchers, Kristian Larson and Jason Gilliland, conclude in the paper that although recent studies in larger cities in Canada have found that those cities don't have "food deserts," their research demonstrates such areas where people have limited access to affordable and healthy food do exist in inner-city Central and East London Ontario.

Although the study as conducted can't be completely generalized to other cities in other countries like the United States, it is important because its methodology can be used to study the "food desert" phenomenon in urban region's globally.

In the U.S., the issue of "food deserts" in urban inner-cities is a hot topic of discussion and debate. "Food deserts" been documented to exist in U.S. urban regions ranging from Detroit, Michigan and Cleveland, Ohio, to Los Angeles and San Francisco in California.

In fact, one of Tesco's strategies with its small-format, convenience-oriented discount grocery and fresh foods Fresh & Easy Neighborhood Market stores is to locate the markets in urban areas where neighborhood residents are under-served by grocery stores that offer a decent selection of basic grocery and fresh foods' items at reasonable prices.

Thus far Tesco has opened two of its 61 Fresh & Easy stores in urban areas which can be defined as "food deserts." Those stores are in Los Angeles and in Compton, which is located in South Central LA.

Additionally, the grocer is planning to open a store early next year in the Bayview-Hunter's Point neighborhood in San Francisco, an area whose residents have long been under-served by grocery stores offering reasonably-priced groceries and fresh foods. In fact, the city of San Francisco recently released a study in which it said the neighborhood's residents spend about $14 million a year at grocery stores outside the neighborhood or in nearby citys.

Tesco also plans to open one or more Fresh & Easy grocery stores in "food desert" neighborhoods in Oakland, California next year, as well as one market in a neighborhood in Sacramento, whose residents are lacking grocery stores that offer reasonably-priced basic grocery items and fresh foods.

The grocery chain has said it plans to open many more of its small-format Fresh & Easy stores in under-served neighborhoods in Southern California and the Phoenix, Arizona Metro region.

As Fresh & Easy Buzz has written before, we think the "food desert" strategy offers much potential for Tesco's Fresh & Easy Neighborhood Market. Few if any U.S-based supermarket chains or even independents have been willing to locate stores in these under-served inner-city neighborhoods.

For example, the Compton city council and community groups in that Southern California city tried for years to get every chain and independent with stores in Southern California to put a store in the location where Fresh & Easy opened earlier this year. None would do it. Tesco did.

Similarly, the city of San Francisco and a coalition of community groups tried for over a decade to get a supermarket company to open a store in the Bayview-Hunters Point neighborhood where a new, 15,000 square foot Fresh & Easy grocery market is currently being built. None would do so, not even local independent grocers.

Further, we believe the "food desert" strategy has the potential to bring Tesco lots of good will for its Fresh & Easy grocery stores in the Western U.S. if its implemented in a more than selective manner.

City officials in Compton for example have praised the grocer as the only food retailer who would listen seriously to their arguments for building a supermarket in the neighborhood where the Fresh & Easy store is now open and operating. In fact, the city of Compton even gave Tesco numerous tax breaks and other incentives to encourage the retailer to locate a grocery market in the struggling city.

San Francisco officials and activists in Bayview-Hunters Point have similar praise for the United Kingdom-based Tesco.

Locally-based Safeway Stores and many other grocers said "no thanks" to building a new store in the low-income neighborhood. However, Tesco said yes, and "they even see it as an opportunity like we do", San Francisco Mayor Gavin Newsom told us recently.

We will watch with interest as to how many more of its Fresh & Easy grocery stores Tesco locates in lower-income, inner-city "food deserts." There remain a number of neighborhoods in Southern California (especially in Los Angeles) for example in need of grocery stores offering basic groceries and fresh foods at reasonable prices.

The "food desert" strategy is really a niche Tesco could own with its Fresh & Easy stores in the next couple years, since very few if any grocers in the Western USA want to open stores in the lower income, inner-city neighborhoods.

Readers' Note: You can read an abstract of the study, "Mapping the evolution of 'food deserts' in a Canadian City: Supermarket accessibility in London, Ontario, 1961-2005," here. You can also obtain a provisional PDF version of the complete study at the link above.

Additionally, for some further reading on the "food desert" phenomenon, we suggest this piece by Punam Ohri-Vachaspati, Ph.D and R.D, an Extension educator and Assistant Professor at Ohio State University Extension in Cuyahoga County, Ohio.

The campaign will target the food and lifestyle sections of print and online newspapers and magazines, as well as other food-oriented consumer publications and blogs.

As we reported on March 17 (at the bottom of the linked page), Fresh & Easy Neighborhood Market interviewed a number of public relations firms to assist the retailer with its marketing and corporate communications efforts for its 61 stores in Southern California, Arizona and Nevada.

One of the charges to these firms in terms of preparing their pitches to Fresh & Easy for its public relations business was to develop a plan to gain publicity for its Fresh & Easy store brand fresh food and grocery products and proprietary specialty-blended wines in consumer food and lifestyle-oriented sections and publications.

The goal of the brand marketing public relations campaign is to position the Fresh & Easy brand and the wines as quality yet affordable products for consumers, as well as to make the brands famous as a brand exercise. The buzz words or message Fresh & Easy hopes to convey for its store brand food and grocery products and wines in its consumer brand marketing public relations campaign are essentially: fresh, high quality, low price.

As we reported on April 13, Fresh & Easy has chosen a new public relations firm of record from those it interviewed in March.

That PR firm will launch the brand building public relations campaign along with Fresh & Easy Neighborhood Market's in-house marketing and PR team.

Fresh & Easy is generally pleased with the amount of press it's obtained in the business sections of U.S. newspapers and in specialty business publications, we've learned. However, the retailer hasn't been able to get much if any press in the consumer food and lifestyle sections or publications, which is why in part it launched its search for an outside public relations firm with media connections in the Western U.S. to assist in these efforts.

Fresh & Easy stores offer an extensive selection of fresh, prepared ready-to-eat and ready-to-heat foods in its 10,000 square foot combined basic grocery, fresh and specialty foods format grocery markets. The prepared foods were created by a professional chef and are produced in a large commercial kitchen at the grocery chain's 88-acre distribution center in Riverside, California and then delivered to the stores.

The grocery chain also merchandises a wide-variety of Fresh & Easy brand grocery products across all categories, ranging from eggs and pasta sauces, to packaged dry grocery items and more. In fact, about 65% of all the products in the Fresh & Easy grocery stores are under the Fresh & Easy store brand.

Fresh & Easy stores also carry about 60 varieties of the chain's own specialty-blended wines, in addition to other brands and varieties. In addition, Tesco's Fresh & Easy Neighborhood Market employs a Master of Wine, of which there are only 250 in the world, and only 20 -to- 25 currently working in the U.S.

It appears Fresh & Easy is taking a page out of specialty grocer Trader Joe's product marketing playbook for its store brand food and grocery products and wine selection. Trader Joe's has built its various store brand food and grocery products and its extensive wine selection--including its famous "Two Buck Chuck" Charles Shaw proprietary wine brand--through brand-building public relations or "free media" campaigns rather than through advertising.

Trader Joe's has numerous store or private label grocery product brands. Much of the success of these brands, in addition to their quality, is based on the humorous and quirky-sounding names ( the specialty grocer gives to them. Not only do such quirky names draw consumer attention, but the attention of the consumer food and lifestyle press as well.

Additionally, Trader Joe's has become famous for its extensive selection of affordably-priced domestic and imported wines (and craft beers). In fact, its $1.99 per-bottle Charles Shaw brand ("Two Buck Chuck") won the top honors (a Double Gold medal), beating out wines priced more than ten-times as much, in that very same California State Fair Wine Judging mentioned above.

Since Tesco has positioned its Fresh & Easy stores as a combination discount, basic grocery store and fresh and specialty foods' market, it should be interesting to see if the retailer can build brand using the marketing-oriented public relations campaign.

Generally speaking, such brand-building efforts usually work best for specialty retailers like Trader Joe's, Whole Foods Market, Bristol Farms and others.

From a positioning standpoint, Fresh & Easy has to be careful such a campaign doesn't negate its positioning as a discount, neighborhood grocery store for the masses.

On the other hand, the Fresh & Easy brand has absolutely zero brand equity in the marketplace, since it was just introduced when the first stores opened in November, 2007. The only consumer awareness the brand has received to date basically is from shoppers going into the stores and seeing it on the shelves.

As such, the brand is in need of publicity and consumer awareness. A well-planned and executed consumer brand marketing public relations campaign can pay major dividends as well as create awareness among consumers who haven't yet been into a Fresh & Easy Neighborhood Market small-format, convenience-oriented grocery store.

Remember, if and when you start seeing stories about Fresh & Easy brand food and grocery products and the grocer's proprietary specialty-blended wines begin to appear in the food and lifestyle sections of print and online newspapers, and in other consumer food-oriented publications, you read it hear on Fresh & Easy Buzz first.

Mega-retailer Wal-Mart may have found a solution (or two) to all the community-based opposition in many parts of the U.S. to the retailer's building of its supercenter stores.

Last month, the brawny big-box bruiser from Bentonville (Arkansas) decided to kill 47 new supercenter store projects it had on the books for a variety of reasons, all having to do with either opposition to the stores from city and country governments or community-based groups in the cities and neighborhoods where the respective stores were to be built.

Don't feel sorry for Wal-Mart though. The world's and United States' largest retailer will still open at least that many (47) new supercenters in the U.S. this year, plus a handful more.

The municipal government and community-based group opposition is a serious impediment to Wal-Mart's supercenter growth plan in the U.S. however. But it's not a new problem. It's been going for for years.

However, what is new is Wal-Mart's response to the opposition, which historically has only been one-dimensional: To lobby city governments and community groups, trying to change their minds, or to fight the opposition in court.

Until now, that is.

The Modesto CA supercenter strategy

In the Central Valley city of Modesto in Northern California, Wal-Mart is gutting an old 90,000-105,000 square-foot (about 75,00-80,000 square-feet of selling space) vacant big-box retail building, which most recently was divided in half and housed a store belonging to the now gone local discount warehouse grocery chain SavMax in one half of the building and a Rite-Aid drug store in the other half.

Wal-Mart is turning the vacant building into a scaled-down version of its supercenter format store. The Modesto supercenter, which is located at 3848 McHenry Blvd., a popular shopping street in the city of about 210,000, will have all the departments--fresh produce, meat, perishables, dry grocery and the like--that its larger supercenters have, which average about 185,000 square feet, and run as big as 225,000 square feet.

The only difference between the more petite Modesto supercenter and nearly all of the retailer's other, larger supercenters, is that those departments will be scaled down and the store's overall product selection will be a bit less expansive than in the traditional supercenters.

To compare the size difference of this new supercenter in Modesto to Wal-Mart's other stores of the same format, lets compare it to the retailer's Wal-Mart discount store format stores, one of which the retailer has in Modesto. That store, like all the Wal-Mart discount format stores, carries only a limited assortment of grocery products in a few aisles plus some basic frozen and perishable foods. However, it's still 115,000 square-feet without the supermarket inside, which makes it considerably larger than the new full food and grocery "hybrid" supercenter set to open early next year on Modesto's McHenry Avenue.

The main reason Wal-Mart is doing this supercenter scaling-down in California, and especially in the Central Valley, is because the state as a whole and the region particularly, has been one of the most difficult places in the U.S. for the mega-retailer to get approval to build it's 185,000 -to- 225,000 square-foot new, from the ground-up supercenters.

For example, Wal-Mart planned to build a roughly 200,000 square-foot supercenter in a shopping center in Modesto in 2001. However, after a couple years' of battling with the city planning commission and city council, as well as opposition from numerous small business groups, it abandoned those plans.

In 2004, Wal-Mart proposed building a brand new 225,000 square-foot supercenter in Turlock, which is a city of about 75,000 residents located just 10 miles from Modesto. The Turlock City Council not only rejected Wal-Mart's proposal - even though the retailer already had a Wal-Mart discount store in the city and promised to keep it open along with the new supercenter - it ended up passing a big-box ordinance, which prohibited any retailer from opening a store of at least 100,000 square-feet, that devoted at least 5% of its floor space to grocery items.

The supercenter ban was specifically designed to prevent Wal-Mart from locating a supercenter in the city. However, through its language it left the door open for big box retailers like Costco Wholesale and even Wal-Mart's Sam's Club.

Wal-Mart filed a lawsuit against the city of Turlock in February 2004, one month after the city council passed the ban legislation. The case was in the courts for two years. In 2006 the court ruled in favor of the city and Wal-Mart announced it would no longer try to build a supercenter in the city.

Big box bans like Turlock's are common in California. Two other cities in the area, Oakdale which is next door to Modesto, and Patterson, which is about 25 minutes away from Modesto, have both passed laws similar to Turlock's, designed specifically to keep Wal-Mart supercenters out of their respective cities.

Wal-Mart pulled the plug on a supercenter in another nearby city in 2006, when the city of Ripon, just a few miles from Modesto, fought against the retailer's proposal to locate a supercenter in the community. At the time the issue of contention was over where the supercenter would be located in Ripon. Wal-Mart announced it would not build on the site but would look for a more suitable location in the city. That was two years ago and the retailer is yet to announce a site in Ripon.

Last year, Wal-Mart did get approval to build a 225,000 square foot supercenter in Ceres, which is right next door to Modesto. However, the community of about 45,000 was far from the retailer's first or second choice in the region. But since the city is aggressively seeking retail and streamlined the permit process, Wal-Mart went forward with the proposal. The Ceres, California supercenter is currently being built - not without community protest of sorts - and is scheduled to open in 2009.

Bay Area and Southern CA tough for supercenters

Its not just the Central Valley that opposes Wal-Mart supercenters so strongly. In fact, the nine county San Francisco Bay Area, which is about 90 minutes from Modesto, opposes the mega-stores as much or even more than the valley's municipalities and communty groups do.

Wal-Mart has only a couple supercenters in the 7-million population-strong Bay Area. Those stores are out in the fringes of the region where opposition and the need for tax dollars of any kind are far more desired than in the major Bay Area cities and suburbs. As a result, opposition to the supercenters is less intense.

Try as it might, Wal-Mart has failed to build numerous new supercenters its proposed in many of the most desirable Bay Area cities; cities where it wants to be with that format.

Wal-Mart hasn't had much better luck in the Southern California region, where more than half of California's residents live. It has some supercenters in the region, but nowhere near the number it wants - or has tried to get approval for.

In fact, it's in Southern California where Wal-Mart has come up with phase two of its plan to open more supercenters in the Golden State, albeit somewhat smaller than average like the Modesto store.

The retailer just announced plans to add an additional 25,000 -to- 50,000 square feet on to a number of its Wal-Mart discount stores in Orange County, thereby turning them into hybrid supercenters.

According to John Mendez of Wal-Mart, the stores will have all the same departments and sell the same food and grocery products that a standard, larger supercenter does. The departments will just be scaled-back and have a more limited overall product assortment.

Wal-Mart's discount stores sell perishable items like milk, juice and eggs, have some frozen foods, and contain aisles where a limited assortment of grocery products are offered.

The expanded discount stores would still retain all the non-foods departments they currently have but would add a smaller-version of a full-fledged Wal-Mart supercenter-style supermarket inside.

Wal-Mart becoming more agile

These two developments, along with Wal-Mart's new, small-format (about 15,000 -to- 20,000 square feet) Marketside grocery markets, which will make their debut this summer in the Phoenix, Arizona Metropolitan region, are showing that a mega-retailer can also be a nimble one when it comes to format adjustments and creations.

By choosing a supercenter strategy which includes remodeling vacant, smaller buildings like in Modesto, and adding on square-footage to Wal-Mart discount stores like the retailer plans to do in Orange County, Wal-Mart is showing a new adaptability after years of sticking with the single supercenter mind set and format.

As a result, the retailer will be able to garner much more of the grocery dollar market share in states like California where the opportunity is there but the jumbo-sized singular supercenter format has proven a barrier to entry.

Additionally, the small-format Marketside stores will give Wal-Mart an urban strategy for city's like San Francisco, Oakland, San Jose and Sacramento in Northern California, and Los Angeles and San Diego in Southern California, if it chooses that strategy.

For example, it's impossible for Wal-Mart to get approval, even if it found the space, to built a supercenter in politically-charged San Francisco. However, it's likely it could get approval - with a bit of a fight still - to build a 15,000 -to- 20,000 square-foot Marketside store, or two in the highly dense city.

The same is the case in urban Los Angeles and San Diego. In terms of the Modesto model of locating a supercenter in a smaller, existing building, doing so makes it difficult for a city to stop Wal-Mart because the application and permitting process is much different than when building a new store from the ground up. Essentially, a city like Modesto can't prevent Wal-Mart from putting whatever type of store it desires in an existing building like the Modesto location, as long as it files the proper paperwork and meets existing city laws.

It's the same for the square-footage additions the retailer plans to do with some of its Orange County Wal-Mart discount stores. Should the respective cities in Orange County try to hold up or prevent Wal-Mart from adding the additional square footage to those stores, the retailer would easily win in court, since such additions are done by retailers of all types regularly, and preventing Wal-Mart alone from doing it would likely be ruled discriminatory.

Localizing and shrinking new supercenters

Another strategy Wal-Mart is employing is to design its supercenter to fit in with a local city's geographic location, setting, culture and history. For example, the brand new Wal-Mart supercenter in Austin, Texas pictured at the top of this piece, sure looks different than the typical Wal-Mart square, big box supercenter, doesn't it? It's designed to fit into the more hip, upscale style that is Austin.

The retailer has designed similar "local" supercenters in Colorado that fit in with the regions rugged mountains and woods, using different roofing and siding on the buildings, in addition to numerous other local touches. One supercenter in Colorado even has a complete bicycle shop in the store, and Wal-Mart built and paid for bike paths and bike racks on land around the store because the community is a major bicycling area.

These localization design strategies also include shrinking the supercenters a bit if need be. Wal Mart has built a couple of brand new supercenters so far that are in the 130,000 square foot range rather than the average 185,000 size.

Market share is key regardless of format

Last year Wal-Mart overtook Kroger Co. as the number one grocery sales market share leader in the U.S. It's a close race between the two retailers though.

What Wal-Mart seems to have finally figured out with its new format flexibility as detailed in this piece, is that grocery market share is king, and it doesn't have to just come from a 185,000 -to- 225,000 square-foot supercenter.

In addition to putting the scaled-down supercenters in vacant big-box buildings like the retailer is doing in Modesto, adding the additional square-footage for groceries onto the existing discount Wal-Marts in Orange County, plus introducing the new, small-format Marketside grocery stores this summer in Arizona, Wal-Mart also is building more of its average 40,000-45,000 square-foot Neighborhood Market supermarkets this year and next than it has in many years.

This new, multi-supercenter and multi grocery store format strategy should give Wal-Mart additional market share, allowing it to increase its lead over Kroger. The main reason this should be the case is because these strategies will allow it to increase its grocery sales square-footage in places like California where it currently has a minimal food and grocery retailing presence because of the inability to open any where near the number of traditional, new supercenters it has wanted to for over a decade.

The mega-retailer plans to use its "hybrid" Modesto supercenter strategy and the Orange County add-on discount store strategy in other parts of the U.S. in which gaining approval for new, built from the ground up supercenters is a problem.

The Modesto supercenter strategy also will be used in places like urban areas, where space is of a premium and the idea of acquiring an empty big box building and turning it into a Superstore is a good option.

Further, expect to see Wal-Mart add additional square-feet onto other discount stores in other parts of the U.S. this year and beyond. Food and grocery sales are what's allowing the retailer to post strong sales and profit gains like its recently released quarterly profits.

Wal-Mart wants to be able to sell more food and grocery products in all categories in all of its stores--as well as in more places in the USA. As a result, the strategies detailed in this piece will be implemented, along with the building of new supercenters, wherever the brawny big box retailer from Bentonville thinks they make sense.

Food prices throughout the world are soaring. Basic food staples like rice, wheat, corn and soybeans are all up by high double-digits. For example, the cost of rice is up by a whopping 68% since just the beginning of this year. The cost of wheat is up about 30% and corn isn't far behind. Soybeans have experienced double-digit price hikes as well.

Additionally, world stockpiles of basic grains like wheat, rice and corn also are at their lowest levels in nearly a decade, according to the U.S. Department of Agriculture, the World Bank, the U.N World Food Program, and other sources.

This combination of soaring prices for the food commodities, combined with dramatically reduced stockpiles, also is creating a psychology among governments and consumers that shortages may loom even greater.

The people being hurt the most by the soaring cost of food are the world's poorest. Rationing is occurring in some countries and in many others people don't have enough money to even buy a loaf of bread to feed their families for the day.

Further, food riots have broken out in places like the Island nation of Haiti, in parts of Africa and in Egypt. The United Nation's World Food Program said this week the globe is experiencing the worse hunger epidemic in 30 years--and that it could even become the worse the organization has seen since World War II.

Even in the developed world, the soaring cost of food is affecting people. In the U.S. and Europe the price of eggs is up by 25% since January, 2008. Milk also is up by about 20% in just the last four months. Most other food products like bread and cereals made with wheat, corn, rice and soy beans--including meat and poultry which are fed corn and other grains--are increasing by double-digits as well.

There have been boycotts in Italy against the soaring price of pasta for example. And in France, thousands of consumers recently held a one-day boycott, not purchasing any baguettes, that nation's national bread.

The United Nations, World Bank and governments like the U.S., United Kingdom and other rich nations all agree there's a global food crisis going on. The reasons range from increased demand for grains and meats from rapidly-developing countries like China and India, who's people want to eat more like western peoples do, to increased use of corn for fuel rather than food, and numerous other explanations.

The food and grocery publication Natural~Specialty Foods Memo has a global food crisis special feature series today which we recommend to our readers.

The series offers numerous stories, information, analysis and opinion on the present global food crisis and where things might be headed.

Click here to view the Global Food Crisis Series at Natural~Specialty Foods Memo.

Fresh & Easy Buzz readers who want to help the poorest people in the poorest nations can make a donation to the United Nations World Food Program. To find out how you can help go to their website here.

We also suggest spending just 10 minutes or so of your time playing the online vocabulary game FreeRice.com. For every word you define correctly, sponsors give 20 grains of rice to the U.N World Food Program.

In fact, we just spent 10 minutes playing FreeRice online. Not only did we get enough words correct that it resulted in a bunch of free grains of rice being donated, but we built or vocabulary skills even more as well. We visit FreeRice.com for 10 or 15 minutes two or three times a week. The individual effort adds up.

We also ask our readers to email this piece from Fresh & Easy Buzz--with the links to FreeRice.com--to all those people on your email list.

Imagine if we can get a couple thousand people all playing FreeRice.com for just 10 or 15 minutes each in the next couple days. That could mean lots of free rice for hungry people.

And, remember, all the rice donated to the U.N World Food Program from the FreeRice online game is paid for by the sponsors, who's names you can see across the bottom of the FreeRice web page. All it takes for you to help is a little bit of your time--and you don't even have to leave your PC where you are reading this to do it.

Thursday, April 24, 2008

Alameda County (where the city of Oakland is located) Superior Court Judge Frank Roesch has issued a ruling placing an injunction on the single-use plastic carrier bag ban the Oakland City Council passed into law last year.

Oakland's plastic grocery bag law would ban food and grocery retailers with stores that do over $1 million a year in sales from offering the single-use plastic carrier bags in their stores. The grocers would still be able to offer paper grocery sacks to shoppers for no charge however.

A single-use plastic carrier bag trade association called The Coalition to Support Plastic Bag Recycling sued the city of Oakland last summer after the bag ban was passed by the lawmakers.

The trade group argued in the lawsuit that single-use paper grocery bags take more energy to produce and use more landfill space when disposed of than single-use plastic carrier bags. They further argued the city of Oakland should have conducted an environmental impact review (EIR) comparing the energy inputs required to produce the paper grocery sacks and the plastic bags, as well as studying the landfill disposal issue as part of that EIR before passing the single-use plastic carrier bag ban law.

California has a statewide law which requires supermarkets to put single-use plastic carrier bag recycling bins in their stores and have the bags picked up regularly in-store by a certified recycling company, as well as requiring the retailers to sell reusable shopping bags in those stores.

Although the single-use plastic carrier bag ban law was past last year, Oakland has yet to implement it because of the lawsuit.

Judge Roesch's ruling states: "The court...finds that substantial evidence in the record supports at least a fair argument that single-use paper bags are more damaging than single-use plastic bags."

John Russo, Oakland's City Attorney, says he will ask the city council this week if it wants to contest the court's ruling or do an environmental review of the ban, which he says will cost the city about $100,000 to conduct.

In response to Judge Roesch's ruling in favor of the Coalition to Support Plastic Bag Recycling's lawsuit, Keith Cristman, the senior director of the American Chemistry Council's plastics division which opposes the Oakland law, said in a statement that "banning plastic bags would dramatically increase energy use, double greenhouse gas emissions and increase waste. Recycling plastic bags is the right approach and makes plastic bags the environmentally responsible choice."

Christman is basing his arguments above on the coalition's argument that banning the single-use plastic carrier bags in the Oakland food and grocery stores with $1 million or more in annual sales would lead to a significant increase in the use of paper grocery bags.

There is some evidence in nearby San Francisco for the paper bag increase in use argument. That city passed a similar plastic bag ban before Oakland passed its law last year. The San Francisco law, which was implemented last year, banned grocery chains and independents that operate stores over 10,000 square feet in size from offering single-use plastic carrier bags in those stores. The law allows the retailers' to continue to offer free paper grocery bags to shoppers.

Numerous grocers in San Francisco, such as Safeway Stores, Inc., regional chain Mollie Stone's and others, have reported paper bag use in their stores increasing dramatically since the plastic grocery bag ban law went into effect last year.

However, they also have reported a significant increase in shoppers bringing their own reusable shopping bags to the stores, along with an increase in the number of reusable bags their stores are selling since the plastic grocery bag ban went into effect.

Further, the City of San Francisco argues, and many agree, that because the city's system of curbside recycling for paper grocery bags is so simple and is available in every neighborhood in the city, over 70% of those single-use paper grocery bags are being recycled, unlike plastic grocery bags which they say end-up either in the city's landfill or littered on the streets.

Many food and grocery retailers in San Francisco also give shoppers a five cent credit for every paper grocery bag they return to the stores. Whole Foods Market stores in the city give customers a 10 cent per-bag credit for each returned paper grocery sack.

The Coalition to Support Plastic Bag Recycling didn't oppose San Francisco's ban in court for some reason. Rather, it chose to file a lawsuit against the city of Oakland's plastic bag ban law instead. The two city's laws are nearly identical expect San Francisco's bases the ban on the square footage of a grocery store (the 10,000 square feet size), while Oakland's law is based on annual store sales (the $1 million number.)

If the city of Oakland doesn't appeal the court's ruling and the injunction stays, that means the city's single-use plastic carrier bag law can't be implemented. As such, it will be interesting to see what decision the city council gives City Attorney John Russo this week.

If the coalition does win the case on appeal (if Oakland appeals), it could set a nationwide precedent regarding municipal plastic bag bans in the U.S.

We've located at least 30 cities in the U.S. that currently have proposals to ban the use of the single-use plastic carrier bags in supermarkets in their city's and towns. It's likely if the Oakland injunction holds, the coalition and other industry groups will use it as the basis of fighting similar proposed legislation in cities and counties throughout the U.S.

If the Oakland City Council decides to conduct the environmental review, the second option Russo has presented to the legislative body this week, it can use the results (if favorable to the bag ban law) in its appeal.

Tuesday, April 22, 2008

Tesco's Fresh & Easy Neighborhood Market will be the food and grocery retail anchor of a new 315,000 square foot shopping center called Higley Pavilion in Gilbert, Arizona, which is in the Phoenix Metropolitan region, we've learned.

Fresh & Easy has signed a lease for 14,000 square feet of retail space in the new center, where it will built a new, from the ground-up small-format, convenience oriented Fresh & Easy Neighborhood Market grocery store.

A big-box Lowe's Home Improvement store, which is already open, is the center's primary (and largest) retail anchor store. The new Fresh & Easy grocery market in the center is scheduled to open next year, according to Kornwasser Shopping Center, the landlord.

Since the new Gilbert Fresh & Easy store will be built from the ground-up, rather than being located in renovated former retail buildings like the majority of the grocer's current 61 stores are, it will give Tesco the opportunity like it has with some of the other new stores it's constructing to implement many of its "green" building design practices, including conservation measures it's adopted as a member of LEED, the U.S. Green Building Council, which is recognized in the U.S. as setting the most superior standards in "green" building design and construction.

This won't be the first Fresh & Easy grocery store in Gilbert. The Phoenix Metropolitan region is the grocer's number two most important target market in terms of potential sales volume after Southern California. It currently has 11 Fresh & Easy stores open in the region, with 14 more set to open before the year is over.

On the 'Green Building' web page, Fresh & Easy is touting a number of environmental initiatives it has initiated at its 850,000 square foot distribution center in Riverside, California and in its current 61 small-format, convenience-oriented grocery stores in Southern California, Arizona and Nevada.

Among those include an impressive 500,00 square foot solar panel array and system on the roof of the Riverside distribution center. Fresh & Easy Neighborhood Market says thus far the solar installation is providing about 30% of the facility's total energy needs.

One interesting overall environmental aspect of Tesco's Fresh & Easy grocery stores--which average about 10,000 -to- 13,000 square feet compared to the average U.S. Supermarket which averages about 35,000 -to- 60,000 square feet--is that by the mere virtue of the stores' smaller-size they use less energy on average than the typical U.S. supermarket does.

Therefore, in a sense you could say Tesco is practicing the ultimate in green building practices, source-reduction, by having smaller than average supermarkets. After all, it takes far less energy to heat and cool a 10,000 square foot store compared to a 30,000 or 50,000 square foot supermarket.

Additionally, since the stores are smaller than average, they have fewer and smaller freezer and refrigerated display cases and smaller backroom walk-in boxes, which also means less energy use in the small-format grocery stores compared to the average U.S. supermarket.

Heating a grocery store in the winter and keeping it cool in the summer by running air conditioning, along with the energy required to power perishables display cases and backroom walk-in cooler boxes and freezers, are the number one and two biggest sources of energy use (electricity and natural gas primarily) in a modern supermarket today.

Lastly, since the Fresh & Easy stores are about 1/3 smaller than even the smallest (30,000 square foot) average supermarket in the U.S., that means the carbon footprint per-store is much less than that of retailers who operate conventional-size supermarkets.

Therefore, if you combine the "source-reduction" aspect of the Fresh & Easy grocery stores--that they are much smaller than the average U.S. supermarket and as a result use much less energy overall--with the conservation and green building practices Tesco is implementing in its USA Fresh & Easy Neighborhood market stores, the retailer has a pretty good "green" retailing story to tell, we believe.

We're surprised Tesco's Fresh & Easy Neighborhood Market doesn't tout the source-reduction, energy saving aspects of the stores' small-format in addition to its conservation measures and other "green" building and operations practices. Perhaps the grocer hasn't thought of it? It could be a powerful example to site in terms of gaining some competitive advantage in the "green retailing" arena, we believe.

Of course, like all retailers Fresh & Easy could do better. For example: installing solar panels on the grocery stores' roofs as well as at the distribution center, better "green" building practices in remodeling the numerous empty retail buildings it's turned into Fresh & Easy stores, and selling more produce bulk rather than having everything packaged in plastic tubs and plastic bags (packaging source reduction).

However, the combination of original source-reduction (by design) based on the smaller-format grocery stores (which equals less energy use), combined with the "green" efforts and practices the retailer has initiated, offers a pretty good overall "green" story for Fresh & Easy thus far in its only six months of retail operations in the Western U.S. states of California, Arizona and Nevada.

We will watch the development of Fresh & Easy's 'Green Building' webpage, which we think is a good idea, with much interest in the coming days, weeks and months. Used well it could become a valuable tool for the grocery retailer, its suppliers and consumers, we believe.

About Me

Fresh & Easy Buzz is an independent Blog and is not affiliated with Tesco, Tesco's Fresh & Easy Neighborhood Market or any of its competitors.
We welcome your tips at Fresh & Easy Buzz. Your anonymity is guaranteed.
Our policy is if your tip passes our vetting and fact checking process, and we decide to use any information you provide us, we will not use your name unless you give us your express permission to do so. At no time do we ever share our sources with others.
Email any tips, inside information, comments or suggestions to us at: freshneasybuzz@yahoo.com.